Latvian state-owned utility Latvenergo has applied for compensation in the wake of the government’s September decision to cut future capacity payments for cogeneration plants with a capacity over 100 MW.
Existing plants were offered a one-off payment this month under adaptations to an existing law, in return for agreeing to a partial reduction in future support.
Latvenergo has opted to forfeit 75 per cent of promised annual capacity payments amounting to €262m ($307m) for two cogeneration plants, Riga TEC-1 and Riga TEC-2.
In return, a one-off payment of €454m is to be financed by a capital release.
Latvia’s cogeneration support scheme was approved by the European Commission in April and is financed by a tax on all electricity users.
The country has seen steady growth in cogeneration capacity. From January to November 2016 (last available figures), Latvian cogeneration plants generated 3 GWh, an increase of 7.4 per cent on 2015 numbers.
The 544 MWe/1124 MWth Riga TEC-2 came online in the 1970s and its second unit was upgraded in 2013. Its first unit was upgraded in 2009. Riga TEC-1 was last upgraded in 2005.
Together, the plants supply power to Riga as well as the city’s district heating system.